What Didn't the Banking Crunch Or Great Recession Change in Banking?

If the past three years have been the worst since the Great Depression, why is it we didn't lose at least 30% of the banks? We didn't and the numbers don't lie.

There's a huge difference, of course, if the shrinkage is due to M&A activity where sellers used to get three times book value, rather than today's quitters who are lucky to get 10% of the value of their OREO portfolio. But it still seems to me there's some kind of regulatory control going on at 20th St. and Constitution Ave. in DC that wants to see a decline in the number of banks. So while all the attention is on the FDIC and others holding the padlocks, the Fed appears to be happy with the consistent decline so as to look more like the old countries where we all came from.

The decline has been going on forever it seems. I started tracking in 1994. Every pundit had an opinion. Some were radical, like "There will be two thousand banks in the U.S." The Jersey banker who made that prediction is now working at Jersey Shore, I think.

Decline in the Number of U.S. Financial Institutions

Year

Number

Rate of Decline

2010

15219

3.65%

2009

15796

3.53%

2008

16374

3.0%

2007

16881

2.43%

2006

17302

2.9%

2005

17823

2.35%

2004

18251

2.67%

2003

18752

5.2%

2002

19250

3.3%

2001

19901

2.66%

2000

20445

3.03%

1999

21084

3.43%

1998

21829

3.0%

1997

22505

2.91%

1996

23180

4.0%

1995

24143

4.58%

1994

25302

Conclusion: If the statisticians use three measures to determine the nature of a situation, then it would appear that 2010 at 3.65% was not that far out of their range. Pass the champagne.